xledger whitepaper - 5 steps to successful finance system implementation

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| Tel +44 (0)117 3291050 | www.xledger.co.uk Why Business Systems Fail to Deliver Significant Benefit July 2015 Dave Derham Managing Director Dave Derham Associates Ltd In association with Xledger Ltd

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Page 1: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Why Business Systems Fail to

Deliver Significant Benefit

July 2015

Dave Derham

Managing Director

Dave Derham Associates Ltd

In association with Xledger Ltd

Page 2: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Executive Summary

It is very common these days to find executives who

are highly sceptical about the business benefits

which would result from any investment in

deploying new business systems. Sadly, in all too

many cases, this scepticism is completely justified as

a high proportion of projects do fail to deliver the

benefits anticipated at the outset.

In contrast with these failures are organisations which

do derive massive benefit from the implementation

of new systems. The question we should be asking

ourselves is:

A Series of

Whitepapers

focussing on:

System Selection

System

Implementation

Ongoing

Management

“What is happening in these successful projects which

is not happening in the ones which fail to deliver

benefit?”

The purpose of this series of Whitepapers is to shed

some light on the answer to this important question.

We shall achieve this by focusing on the topic from 3

logical perspectives:

System Selection

System Implementation

Ongoing Management

Page 3: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

As described previously, it is very common for the

system selection process to be severely flawed,

resulting in a contract being signed for a new system

which has little chance of delivering major business

benefit.

However, even in cases where the selection process is

managed effectively, the next challenge is to ensure

that it is implemented in a way which will achieve the

anticipated.

Let us start by examining what often happens during

the implementation of a new system.

A Board member is usually involved in the process of

finalising the contract and commercial agreement for

the new system. However, once this activity is

complete, this is frequently the end of any serious

involvement by anyone at Board level.

The Board will normally appoint a project manager to

be responsible for the system implementation. This

may or may not be the same person who was

managing the selection process, but it is frequently

someone with project management or business

systems experience who can be spared from their

“day job” for some time.

The project manager receives a limited number of

objectives from their manager, which are frequently

focused on getting the system in on time and on

budget and making sure there are no disasters.

The project manager agrees the implementation plan

with the supplier and then identifies individuals

within the business who will be involved in various

Part 2: System Implementation

5 Steps to Successful

System

Implementation

1. Ensure Board Level

Involvement

2. Set Expectations

Correctly

3. Select the Right

Project Manager

4. Keep Everything in

Perspective

5. Ensure End-Users

are Fully Trained

Page 4: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

elements of the project. Typically departmental

representatives are used to form a “project team”.

Assuming that the project stays on track eventually

the system set-up is completed and everything is

ready for go-live. The big day happens, hopefully with

few nasty surprises, and everyone heaves a sigh of

relief. The project team get a pat on the back and

everyone goes back to their day jobs.

The end result of the process is that a new system has

been implemented - but in many cases this is at the

expense of delivering the key business benefits which

should have been possible.

Let us look at the individual steps and see what

should really be happening.

Page 5: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Ensure Board Level Involvement

The first major mistake frequently happens

immediately after contract signing when

responsibility for the project is delegated by the

Board to a project manager.

Why does this happen?

There can be a number of reasons for this behaviour.

Firstly, many senior people have a limited

understanding of IT and business systems and believe

that anything to do with them should be left to those

who understand how they work. Secondly, the

strategic importance of the system within the

business is not understood well by a lot of senior

people and their involvement is deemed unnecessary.

Finally, as mentioned in the first article in this series,

there is frequently a large amount of suspicion and

fear around this type of project and it is very common

for senior executives to maintain a safe distance so

that they are not to blame when it all goes wrong.

In order to gain the intended business benefits, it is

essential for the new business system to be seen as a

key component of the business management

strategy. The systems does of course handle a lot of

detailed activity and transactions but the key returns

on the investment will not come from the way it

handles these but the information it delivers, the

overall level of efficiency it provides and the

responsiveness to change that it allows the business

to have.

It is absolutely essential for the Board to have close

involvement with the implementation process to

ensure that the high-level goals are met. It is

completely appropriate to have a project manager to

handle the detail and manage the myriad of activities

and discussions which will take place, but this person

needs to be meeting very regularly with

representatives of the Board to discuss the bigger

picture.

1

The first major mistake

frequently happens

immediately after

contract signing when

responsibility for the

project is delegated by

the Board to a project

manager.

Page 6: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Set Expectations Correctly

It may seem incredible but after all the hard work of

investigating options and choosing a new system, it

is extremely common for there to be a brick wall

between the selection process and the next step,

which is to implement it within the business.

If the selection is done correctly as described in the

first article in this series, then there will have been a

lot of discussion about the key business benefits

which will result from the project. Unfortunately,

these goals are frequently forgotten as soon as the

new system is chosen and there is a naive assumption

that somehow everyone knows what the key

objectives are.

When the project starts, it is common for everyone to

be guided by the supplier’s project manager, who

probably was not involved in any of the pre-contract

discussions and has no idea of the key objectives

themselves.

The essential step at the very start of the project is

for the board to fully brief the team responsible for

the implementation on the reasons why they have

chosen to invest in the system.

The justifications for the investment will be normally

a mixture of getting more accurate and timely

business information, producing efficiencies in the

business and enabling flexibility in appropriate

aspects of the operation.

Whatever the goals are, it is critical that they are

communicated to everyone in the business so that

from the start the whole team is pulling in the same

direction.

2

Whatever the goals are, it

is critical that they are

communicated to

everyone in the business

so that from the start the

whole team is pulling in

the same direction.

Page 7: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Select the Right Project Manager

The choice of project manager is often guided by a

mistaken belief that the new business system is an

IT project and is therefore technical at its core.

This frequently results in the selection of a project

manager based on their technical knowledge. In

other cases people are selected because they have

had previous experience of an implementation

project.

What needs to be considered is the fact that the

project is essentially a process of changing the way

people work - if it isn’t then it means that the

business has made the enormous mistake of selecting

a system which works just like the old one.

Yes, there are technical elements to the process but

these can be delegated to IT or other specialists. The

biggest reason why projects like these fail is the

inability to get individual people to embrace new

ways of doing things.

The most important skills required by the project

manager are therefore interpersonal. They need to

be able to listen and understand peoples issues and

then be able bring people around so that they see the

benefits of doing things in a different way.

Sometimes it is necessary to raise challenges at Board

level so that higher level “coaching” can be engaged.

Projects like this are hard work and place big

pressures on the individuals involved. They are very

often having to do at least some of their “day job”

while helping to get the new system implemented.

3

The choice of project

manager is often guided

by a mistaken belief that

the new business system

is an IT project and is

therefore technical at its

core.

Page 8: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

The project manager needs to be able to keep people

in a resourceful state of mind throughout the project

and to effectively manage the “explosions” which will

occur.

Finally, despite board level oversight of the process,

the Project Manager needs to be a person who

understands the business at a high level and can

therefore keep the key business goals in focus.

Page 9: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Keep Everything in Perspective

In any business system implementation there will be

numerous issues arising where people within the

organisation do not like the way something is going

to be.

The mind-set of “we have always done it this way”

will resurface frequently and this can take up huge

amounts of time and energy.

At points like this it is very easy for the project team

to get swayed by the arguments of those with the

issues, after all, the team do not want to be seen as

the bad guys. A lot of time can be invested into trying

to manipulate the new system or generate work-

arounds to enable things to be done the way they

have in the past.

This is where discipline and focus need to be

maintained. There is no such thing as a system which

will do everything in a way which will keep everyone

happy.

Even having a system custom built would not achieve

this as the requirements analysis / design / build

process is so fraught with problems that it leaves a lot

of people massively unhappy with the result.

What is important to remember is that the system

being implemented was chosen – or should have

been - based on how it will address the “big” things –

the ones which will make the business more healthy

and competitive.

4 In any business system

implementation there

will be numerous issues

arising where people

within the organisation

do not like the way

something is going to be.

Page 10: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

This will often be at the cost of some people in the

business having to do things in a less than ideal way.

For example, if the new system can enable the Board

to see which elements of the business are really the

most profitable or it can help them to quickly set up a

new operation, then does it matter if a few people

have to spend a bit more time each month entering

their data?

Page 11: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Ensure End-Users are Full Trained

For some reason, the level of work involved in

training the end-users of a new system is frequently

under-estimated, resulting in complete chaos for the

first few weeks of live operation.

This error of judgement may be due to the fact that

the project team are extremely involved in working

with the new system that they assume that everyone

else will be able to just use it. Sometimes it is due to

the fact that no-one wanted to spend money on

training people.

The strangest thing of all is that the one group of

people who are most frequently left out of any

meaningful training are the board members.

When we consider that these people should actually

be the ones who will get the biggest benefits from the

investment, this is completely ludicrous.

When this happens, it is a sure sign that the original

business goals of the project have been forgotten and

that it has got totally focused on the “small stuff”.

5

The level of work

involved in training the

end-users of a new

system is frequently

under-estimated,

resulting in complete

chaos for the first few

weeks of live operation.

Page 12: Xledger Whitepaper - 5 Steps to Successful Finance System Implementation

| Tel +44 (0)117 3291050 | www.xledger.co.uk

Dave Derham

Associates Ltd

Swallows Barn

Severn Road

Pilning

Bristol

BS35 4HW

dave.derham@btinternet

.com

Xledger UK

10 Victoria Street

Bristol

BS1 6BN

Tel +44 (0)117 3291050

www.xledger.co.uk

About Xledger

Dave Derham is a business strategy consultant who has spent most of his working life in the IT sector. Dave spent several years with Hewlett Packard before joining a fledgling software business which, as a Director and key strategy developer, he helped to steer into becoming a major international business systems provider. Dave has witnessed the selection, implementation and ownership processes of several hundred business systems over many years. He has witnessed a wide range of results from dismal, costly failures to enormous successes. At the core of Dave’s philosophy is the belief that if organisations adopt clear, deliverable strategies then not only is the business more profitable, but everyone inside the business is far happier as well.

Founded in 2001, Xledger is a privately held software company with international operations in the UK, US, Norway & Sweden. They provide revolutionary Cloud Finance & Project Accounting systems to organisations that want to focus on running their business – not their business systems. The company have helped over 6,000 distributed and project-based organisations in 30 countries achieve significant benefits in greater flexibility, improved control and understanding of their businesses along with significant savings in both cost (25% - 75% savings) and management time. Please visit www.xledger.co.uk for more information.

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